Different Types of Personal Loans You Need to Know About

If you’ve ever availed a Personal Loan, you would definitely be aware of the convenience that it offers as a ready source of funds, owing to its liquidity as a financial instrument. It is an unsecured loan provided to working professionals for their personal use. This means that you needn’t pledge any collateral or security while applying for one. Banks and financial institutions that provide Personal Loans also don’t monitor how they are being used. Therefore, a Personal Loan also offers you a lot of flexibility. You can use one for a variety of purposes, like planning a holiday/trip, taking care of repairs/renovation of any kind, paying off various bills, to financing events like a birthday/wedding celebration.

But did you know that a few banks and financial institutions are also offering different types of Personal Loans, each for a specific purpose? The reason they are doing so is to make sure that you can take care of the costs associated with the respective event/purpose easily and quickly through such loans. The following are the different types of Personal Loans that you need to know about:

Festive / Festival Loans

Celebrating a festival can really burn a hole in your pocket, because of all the expenses involved, including shopping for gifts and new clothes. Therefore, banks have come up with a Personal Loan called Festival or Festive Loans specifically for this purpose. The loan amount offered here is small and comes with low interest rates and processing charges. The net monthly income limit required for eligibility is also lower.

Wedding / Marriage Loans

This is definitely a much-needed Personal Loan, as it helps couples and their respective families finance the wedding and help make it a success. A wedding has a lot of events and various related expenses (hotel bookings, hall bookings, invitations, shopping for jewelry and clothes, decorations, catering, etc.) which will surely leave a big hole in your pocket. Even though this loan is unsecured, please note that the interest rates offered on such loans tend to be on the higher side during the wedding season.

Travel / Holiday Loans

It cannot be denied that taking a vacation – be it an annual trip to the mountains or a weekend beach gateway – will put a considerable dent in your finances. You can avail a Travel Loan and ensure that your next holiday doesn’t drain all of your savings. You could even use your credit card, but a Personal Loan comes with significantly lower rates of interest. Make sure, however, to cover all your travel expenses (and not just the cost of your flight tickets) with your Travel Loan.

Home Improvement Loans

Need to do your living room? Replace the flooring of your house? Or build your own personal office? Whatever your requirement is, you can help finance it with Home Improvement Loans. Since ‘home improvement’ basically means renovation of your house, you are also eligible to claim tax exemptions on the interest amount that you pay on such loans under Section 30 of the Income Tax Act.

Consumer Durable Loans

Consumer Durable Loans refer to those loans given for the purchase of consumer durables, and these loans are usually availed when the customer wants to set up a new home. Consumer durables broadly come under two categories, digital and non-digital products. Digital products include smartphones, laptops, tablets, and printers while non-digital products refer to home appliances such as refrigerators, air conditioners, kitchen appliances and more. Certain individual banks also have tie-ups with retailers or manufacturers, and therefore offer Personal Loans with lower interest rates.

Unsecured Business Loans

Unsecured Business Loans are a boon for small and medium business owners, and this Personal Loan is precisely for such individuals, who may not have any assets or collateral that they can pledge against their loan. Such loans are also helpful for such SME business owners because their eligibility depends on many factors such as repayment history and financial standing, and not just on the value of the collateral they have.